Analysts Just Made A Sizeable Upgrade To Their Tremor International Ltd (LON:TRMR) Forecasts

By
Simply Wall St
Published
May 26, 2021
AIM:TRMR
Source: Shutterstock

Shareholders in Tremor International Ltd ( LON:TRMR ) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. Investors have been pretty optimistic on Tremor International too, with the stock up 17% to UK£8.14 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After this upgrade, Tremor International's two analysts are now forecasting revenues of US$285m in 2021. This would be a notable 17% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to be US$0.22, approximately in line with the last 12 months. Previously, the analysts had been modelling revenues of US$251m and earnings per share (EPS) of US$0.13 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for Tremor International

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AIM:TRMR Earnings and Revenue Growth May 27th 2021

Despite these upgrades, the consensus price target fell 10.0% to US$14.99, perhaps signalling that the uplift in performance is not expected to last. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Tremor International, with the most bullish analyst valuing it at US$16.99 and the most bearish at US$13.00 per share. This is a very narrow spread of estimates, implying either that Tremor International is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 17% growth on an annualised basis. That is in line with its 18% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 7.6% annually. So although Tremor International is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, Tremor International could be one for the watch list.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Tremor International going out as far as 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying .

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